Q2 Expense Trends: Spending Shifts As Employees Get Back to In-person Activities
At the height of the pandemic, employee expenses shifted drastically. Gone from the top of the list were traditional work expenses like flights and on-trip meals; in their place were work-from-home office furniture and atypical items like sewing supplies and dry goods. During that time, many finance teams ventured into unknown territory, lacking the tools to fully grasp where employees were or what they were spending company funds on — gaining insight weeks or months after an expense was made.
As a result, TripActions Liquid, which launched the month before the onset of the pandemic, accelerated its product timeline and strategically expanded the types of purchases employees were able to expense for work. Not only did this empower distributed workforces, it also provided finance and HR teams with real-time visibility into spend while offering greater control, thanks to proactive and flexible spend policies.
Now, finance teams are experiencing yet another shift in spend behavior. Business trips are increasing and employees are getting back to in-person activities as more organizations adopt a hybrid working model and expand the types of allowable expenses in an effort to accommodate permanently remote workers. In Q2, TripActions data show a 193% increase in total travel spend volume and a 183% increase in on-trip expenses quarter-over-quarter.
And while the total amount of travel spend on TripActions is increasing, non-travel spend is continuing to grow its share of the proverbial pie. In January 2021, non-travel spend made up 28% of business spend on TripActions; in August it was nearly 50% — and that’s with a 4x increase in travel bookings during the same timeframe.
So what does this new future of work mean for the economy, and how should finance teams adjust budgets based on employee spend? TripActions Liquid dug into 2021 spend data to find how business expenses trends have changed over the first half of the year.
Top Expense Shifts
In the first quarter of 2021, non-flight travel spend (such as hotels, car rentals, and gas) and software that supports work-from-home (WFH) were the most common categories of business spend. Business travel picked up in Q2, with spend on airfare jumping nine spots, from No. 14 to No. 5. (Historically, travel makes up 70% of all business spend; six of the top 10 spend categories in Q2 are travel or travel adjacent).
The surge of one-off WFH expenses seems to have now settled, with miscellaneous expenses — or expenses employees’ didn’t know how to categorize — dropping from No. 5 to No. 10. And the days of WFH lunches and video conference happy hours may be coming to an end, with grocery stores and supermarkets dropping from the No. 9 to the No. 12 spot.
Looking at the shift in employee spending quarter-over-quarter, it’s apparent employees were eager to leave their work-from-home offices, get outdoors, and partake in social activities. In Q1, TripActions Liquid card purchases that were processed via swipe or chip (indicating that the purchase was made in person) represented 13% of all payments; in Q2, that share increased to 46%. Furthermore, in Q2, expenses for entertaining clients increased 505% quarter-over-quarter.
The share of recreation services spend, which includes activities like mini-golf and table tennis, shot up 107% in Q2. Additionally, the share of business spend on team off-sites at amusement and theme parks (majority Six Flags, Walt Disney World, and Disneyland) increased a whopping 1178%, which which correlates to the closure of many amusement parks in Q1.
Movie theaters and bars each saw gains in Q2. And sports tickets, a common purchase pre-pandemic, made a comeback in the second quarter. Additionally, the share of spend on social groups and professional associations, like the American Psychological Association (APA) and Construction Financial Management Association (CFMA), went up as employees began networking again.
Transportation Changes as Travel Returns
This summer saw the rebound of travel across the industry — and it wasn’t limited to flights and hotels. Traveler confidence in public transportation has also seen sharp upticks; for instance, the share of purchases for passenger railways and ferries surged, with the share of rail ticket spend up 1328% QoQ. Car rentals and ancillary transportation spend, like gas and automobile accessories, also recorded growth in Q2. And with more employees on the road, costs for tire repair, towing services, and toll bridge fees saw significant increases in spend share.
As organizations put together return to office plans, they perhaps considered it time for a fresh coat of paint or to finally fix that leaky sink. Between Q1 and Q2, TripActions Liquid data show indicators of office improvements and cosmetic upgrades, with growth in construction and development costs.
One thing is certain: over the last 18 months, the vast majority of employees spent more time at home than ever before. Marketing teams, trying to understand and capture their audience’s attention, also had to adapt to the era of work-from-home. It appears they attempted to do so through direct mail — and now they’re increasing the budget. Publishing, printing, and catalogs all grew in spend share in Q2 as marketing teams scaled up efforts to reach decision makers, whether said decision makers were at home, at the office — or both.
In preparation for the return to office and travel, the share of business spend on retail — such as clothing stores, accessories, and cosmetic stores — went up in Q2. Laundry cleaning saw its share grow 140% QoQ, while miscellaneous specialty retail grew its share 30%.
Telecommunication and Home Office Spend Shrinks
In Q2, there were notable changes in the types of expenses employees were making — and what they weren’t. Categories with the most significant decreases include telecommunication services and equipment, hospitals and medical services, and home furnishings.
So what do all the shifts and overall growth in business spend mean, and how should finance leaders interpret the findings?
Analyzing the employee expenses trends so far in 2021, it’s clear that organizations are thinking differently about how corporate funds are spent, and restructuring expense policies to support changes for the future of work. Following a year of fiscal caution, organizations now more than ever require real-time data and visibility, as well as new, secure ways for employees to make the purchases they need, when they need them.
The preceding expense data findings reveal updated and more nuanced expense policies, a changing perception of the use of corporate credit cards, and a growing need for modern, all-in-one spend management tools to support evolving expense strategies.
“COVID-19 and the shift to remote have significantly broadened definitions and policies for work expenses,” said Ciara Govern, Chief Customer Officer at TripActions. In fact, non-travel receipts now account for nearly 50% of overall spend on TripActions Liquid. When we launched TripActions Liquid, we weren't necessarily thinking about endless expense possibilities, but in the pandemic, it's morphed into something much bigger.”
About TripActions Liquid:
TripActions Liquid is TripActions’ all-in-one payments and expense solution that gives finance teams real-time spend visibility and control, driving cost savings, productivity, and compliance. Proactive policies are built into smart virtual and physical cards so that expense management is automated from swipe to reconciliation. Interactive dashboards and seamless ERP integrations offer a single, real-time view of all business spend to inform smarter decisions on cost savings and efficiencies.
Employees no longer need to:
- Use personal funds for purchases or wait for reimbursements, using corporate cards with policy automatically applied at the point of sale
- File expense reports, as details are captured at the time of purchase
Finance teams no longer need to:
- Manually review if expenses are within policy, since the policy is built directly into the cards.
- Manually upload and reconcile spend data. TripActions Liquid flows transaction data to the organization’s ERP system.
- Audit receipts and compare them to details entered by employees to catch fraud, since TripActions automatically captures the credit card transaction details.
Itching to go to an in-person event yourself? TRAVERSE 21, TripActions’ annual travel and expense festival, returns outdoors and in person this year, at the San Francisco Palace of Fine Arts on September 29. Proof of vaccinations and testing on-site required.
Want to learn more about how TripActions Liquid’s dynamic spend management solution can help your company save time and money? Sign up for a demo here.
Methodology: TripActions analyzed the change in expense share quarter-over-quarter processed via TripActions Liquid from January to June 2021.